Some €34bn of these flows were into what the firm describes as ‘medium to long-term assets’, with AUM for the year reaching double the amount seen in 2023. For the final quarter of the year, net inflows reached €20.5bn, which included €18bn into medium to long-term assets.

Within ‘medium to long-term assets’, Amundi said most of the flows over the last quarter came from ETFs at €10.5bn, while actively-managed funds pulled in €5.5bn on a net basis. Actively-managed fixed income strategies proved most popular, with gross flows of €9.1bn.

The retail segment of Amundi’s business experienced its highest level of net inflows since 2021 at €11.5bn, with third-party distributers pulling in €12.7bn of capital. The institutional arm of the business achieved net inflows of €7.1bn, with €10.8bn coming from medium to long-term assets.

See also: Amundi launches private credit fund with First Eagle

Market performance and currency moves accounted for €140.1bn throughout the course of the year, and €28.1bn during the final quarter.

In terms of assets under management, ETFs reached €268bn by the end of December, marking a 30% year-on-year increase. Asian assets under management rose by 17% to €469bn, with €28bn in inflows throughout the course of the year. Amundi’s third-party distribution arm grew by 27% year-on-year to reach €401bn, while fixed income capabilities amounted to €1,190bn in assets under management.

Overall, Amundi’s total AUM increased by 10% over the year, and by 2.2% over the past quarter, to a record high of €2,240bn.

From a business perspective, adjusted net income during Q4 reached €377m, marking a 20% increase compared to the same time period in 2023. Adjusted net revenues over the quarter amounted to €924m, a 14.6% uptick compared to Q4 2023.

Valérie Baudson, chief executive officer, said: “2024 was a record year for Amundi, both in terms of results and activity. Our net income has reached €1.4bn and our net inflows have doubled compared to 2023. Our assets under management are at an all-time high, at more than €2.2trn, thanks to very dynamic inflows in several strategic areas, such as third-party distributors, ETFs and Asia. We have also confirmed and expanded our leading position in fixed income strategies.

“Our cost/income ratio, at the best level in the industry, is already in line with our 2025 target. This strong financial performance allows us to propose an increased dividend, offering an attractive return for our shareholders.”

Gross inflows stood at £18.4bn, compared with £15.4bn in 2023, while its retention rate for funds under management stood at 94.5%. This is a slight decrease compared with last year’s 95.3%.

By the end of last year, funds under management totalled £190.2bn, a 13.1% increase in FUM compared with 2023’s closing amount of £168.2bn.

See also: St James’s Place updates asset allocations amid ‘soft landing’ base case

On a quarterly basis, total funds under management across the investment, pension and DFM arms of the business increased by 3.2% from £184.4bn, while net investment returns stood at £4.3bn.

Net inflows came in at £1.5bn for the quarter, with positive flows from all three arms of the business in aggregate.

Mark FitzPatrick, chief executive officer at SJP, said he is “pleased to report a strong final quarter for SJP”.

“Our investment management approach has continued to work well for our clients, with our portfolios delivering strong returns that compare favourably against peer groups. This, together with another year of net inflows, drove our funds under management (FUM) to £190.2bn at 31 December 2024; a record for FUM.”

The CEO explained that, while the run-up to the Autumn Budget created uncertainty and led to an increase in both net and gross outflows during October, “client engagement levels were high throughout the quarter”.

“We continue to focus on our three key programmes of work and as we approach the final stages of implementing our simple and comparable charging structure, we remain on track for delivery by the second half of 2025 and in line with our financial guidance,” FitzPatrick continued. “The work to review historic client servicing records and implement our cost and efficiency programme continues to progress as planned.”

He added: “We have increased our client and adviser numbers, sustained net inflows and achieved record FUM. Looking forward, we see a growing need for trusted financial advice, and I am confident in our ability to capture this and deliver great outcomes for clients and all our stakeholders.”

The decision to hold, which was largely expected by the broader market, comes as US inflation remains 90 basis points above target at 2.9%, alongside the US economy remaining at close to full employment.

Daniela Sabin Hathorn, senior market analyst at Capital.com, said the FOMC’s accompanying statement “once again defended a hawkish stance” with the absence of “any reference about inflation making progress towards the 2% target”.

“It also notes that economic activity has continued to expand at a solid pace while the unemployment rate has stabilised at low levels,” she explained. “While the central bank notes it is attentive to risks to both sides of its dual mandate, the vote to leave rates unchanged was unanimous, suggesting the current pause in rates will likely be extended further.”

See also: ‘The Chancellor has a large task ahead’: UK GDP rises by 0.1%

While markets anticipated that the Fed would hold firm on rates, the decision comes one week after US president Donald Trump demanded an interest rate cut at the World Economic Forum.

Richard Flax, chief investment officer at European digital wealth manager Moneyfarm, said the move will “no doubt frustrate Trump” as the central bank “clearly adopt[s] a wait-and-see approach”.

“Policymakers are likely assessing the impact of the president’s policies on inflation and the broader economy, particularly as his stances on immigration and tariffs continue to unfold.”             

Kambiz Kazemi, chief investment officer at Validus Risk Management, described the polarisation between Trump and the Fed’s views on rates as “the first round of monetary policy stand-off” between the two parties. “In fact, the Fed’s latest statement struck a slightly hawkish tone by suggesting unemployment may have bottomed out, indicating that it views the labour market as robust.

“This position will likely intensify Trump’s criticism over the coming months, and given his inclination to challenge the status quo, we may even see proposals to amend the Federal Reserve Act or alter the Fed’s mandate.”

US bond market ‘likely to stay under pressure’

Reacting to the news, the S&P 500 index initially fell by 0.7% yesterday, but quickly recovered some ground throughout the course of the day. Meanwhile, the US dollar and bond yields edged higher.

Hathorn said: “In the midst of the current earnings season and following the shock seen earlier this week after DeepSeek entered market consciousness, the impact of the FOMC meeting was expected to be limited.

“There may be some added focus on Powell’s commentary in the upcoming press conference, but he is unlikely to give away any new information about the central bank’s forecasts. Market pricing continues to show around 45 basis points of cuts priced in for 2025 after the softer core CPI reading in December increased the odds.”

Daniele Antonucci, chief investment officer at Quintet Private Bank, said the US central bank “isn’t likely to cut rates again in the near term” given the strength of US economic growth.

He said: “As there’s still significant uncertainty around the timing of any Fed move, the US bond market is likely to stay under pressure, especially as any fiscal stimulus might add to inflationary concerns.

“Because of this, and also taking into account that there’s a risk that the extra supply to US bonds might be tough to digest, we’re underweight US Treasuries and prefer short-dated bonds in Europe where the European Central Bank is likely to cut more rapidly, given economic weakness.”

Elsewhere, he remains “slightly overweight US equities as he thinks “growth prospects and deregulation will be supportive”.

“At the same time, given demanding valuations in tech and market concentration, we diversified our exposure into more attractively valued sectors such as industrials and financials that might benefit from US fiscal stimulus.”

DSM initially decided to return capital to shareholders in 2023, following a “dispiriting time for micro-cap stocks”, with shares trading at a discount of between 15% and 1%. Ultimately, the board concluded a managed wind-down would be in the best interest of investors.

Since then, shareholders have received special dividends of 63.9p per share in aggregate, and the portfolio now holds just one listed investment in Centaur Media, alongside a secured loan note in Real Good Food and cash. Net asset value currently stands at £2.3m.

The trust’s investment in Centaur has not yet been realised, according to the board, due to “indications of strategic action by the management team”.

“Your board now seeks the most effective way to return cash to shareholders and limit further costs,” it stated. “With the company’s portfolio significantly reduced and the special dividends paid, your board has determined that it is now the appropriate time to put proposals to shareholders to undertake a members’ voluntary liquidation of the company, which will eliminate certain of the costs associated with running a listed vehicle.”

In order to enter into members’ voluntary liquidation, shareholder approval at an upcoming meeting must reach at least 75%. The meeting will take place at Dickson Minto’s offices in Old Broad Street on the 21 February at 10am.  

Under the proposals, Derek Neil Hyslop and Richard Peter Barker of Ernst & Young have been appointed as the liquidators. They will have the authority to distribute cash to shareholders, after the trust’s liabilities have been paid and wind-up costs have been taken into account. The liquidators are expected to make an initial distribution during the week beginning 3 March 2025 of approximately 2p per share.

Assets ticked up by 6% over the quarter, while net inflows remained steady at £400m – in-line with the same period last year. This meant its total AUM surpassed £7bn for the first time.

In terms of the platform arm of the business, net inflows over the quarter came to £1.4bn, a £100m increase compared to Q1 last year. Gross inflows stood at £3.6bn, however, which is a £900m increase compared to Q1 2023. This meant assets under administration reached record levels of £89.5bn, marking a 17% increase over the last year and 3% over Q1 alone.

See also: AJ Bell eliminates alternatives in 2025 strategic asset allocation

Total customer numbers rose by 16% over the year and 4% over the three-month period, reaching 561,000 by 31 December 2024. Advised customer numbers rose by 8% and 2% over the year and quarter, respectively, to 174,000, while D2C customers reached 387,000. This marked a 20% increase over the year and 2% over the quarter.

Michael Summersgill (pictured), chief executive officer at AJ Bell, said he is “pleased to report a strong start to the financial year”.

“Ahead of the October Budget, speculation around the tax treatment of pensions caused a short-term behavioural change among retail investors, which normalised quickly once the content of the Budget became known,” he explained. “We believe that pension savers deserve more clarity when it comes to the tax treatment of their long-term retirement plans. As such, we continue to call for government to commit to stability through a Pension Tax Lock, providing additional clarity around key features of the pension tax system.

“The strong start to the year positions us well as we approach the busy tax year end period. We remain focused on the significant long-term growth opportunity that exists in the platform market. Our dual-channel approach and continued investments into our propositions and brand mean we are well-placed to continue our strong growth.”

See also: AJ Bell profits rocket 29% in record performance

Major European energy firms are poised to offer “big strategic value” as the world transitions towards decarbonisation, according to JOHCM’s Ben Leyland.

Leyland, who co-manages the JOHCM Global Opportunities fund alongside Robert Lancastle, cited UK oil giant Shell as being primed to benefit from this long-term theme over the next decade and beyond. Shell currently accounts for a 3.3% weighting in the fund, according to its December factsheet, marking it as the seventh-largest position within the 39-stock portfolio.

“What we’re really interested in is the need to invest in energy infrastructure over the next 10 to 15 years, and to move energy infrastructure broadly in a decarbonised direction,” he explained.

“It’s not about taking clear views on whether this is solar, wind, renewables or nuclear – or on whether carbon capture and storage, or hydrogen technologies, are the next big thing. These have their moments in the sun and then dissipate.”

In terms of European energy majors generally, Leyland said they tend to focus more on ‘midstream’ and ‘downstream’ opportunities as opposed to ‘upstream’. ‘Upstream’ refers to the exploration and production stages, while ‘midstream’ includes storing, processing and transporting oil, natural gas and gas liquids. The ‘downstream’ stages involve refining crude oil into fuels.

Leyland explained: “The recent action to launch US energy measures has been to double down in upstream.

“What we like, particularly when it comes to Shell, is that while they do have upstream [capabilities], the real value of the company is the midstream and downstream assets, which ultimately are going to have
big strategic value in the transitioning world.”

He added that Shell’s gas-trading division is also attractive, which was supplemented by the firm’s £47bn acquisition of gas exploration firm BG in 2015.

“There are multiple positives. The fact that LNG [liquefied natural gas] is a tradable transition fuel to help the world towards the decarbonisation agenda is one. Also, the fact Shell is paring back its downstream assets and moving its refinery hubs towards areas such as Rotterdam.

“These areas are well located in that they are industrial hubs for other hard-to-help sectors. So, steel-making or cement companies, which are going to find it very difficult to meet all of those net-zero targets – they are going to need technologies like carbon capture and storage in order to make those commitments real.”

Leyland added that Shell is one of the largest petrol station forecourt providers in the world. According to the company’s website, it has 40,000 forecourt locations across the globe as well as an additional 10,000 partner sites. In the UK, Statista figures show that Shell has the second-highest percentage of forecourts at 13.9%, second only to Esso at 15.2%.

“It’s up to [the consumer] whether they buy a petrol, diesel or electric [car], but at some stage, if we’re going to go down the EV route, we’re going to need charging stations for that. As the strong become stronger, the large will become larger. The tail of smaller companies, which cannot make that transition as effectively, is going to start atrophying.

“So this, alongside the strategic value of its midstream and downstream assets to help the energy transition, is what we think will help Shell generate strong returns.”

‘Where profit and purpose go hand in hand’

Nubank and Grab are two stocks which are tackling significant global challenges but are also set to generate strong long-term returns, according to Baillie Gifford’s Rosie Rankin.

The investment specialist director said Brazilian firm Nubank, which is held within the firm’s £1.9bn Positive Change fund, is one of the world’s largest digital banks. Currently headquartered in São Paulo, the Russell 1000 component was founded in 2013 and has more than 7,000 employees. According to a Bloomberg report in November, however, the bank’s parent firm Nu Holdings is considering moving its legal base to the UK.

“[Nubank] was founded with the intent of providing an alternative to the relatively expensive traditional Brazilian banking system,” Rankin explained. “When we first invested, it had around 58 million customers in 2021. Fast forward to today, and that’s around 100 million customers.

“It is incredible growth in a relatively short period of time, and that’s because it’s offering products and services that are really useful to micro and small enterprises.”

Seven out of 10 new jobs created in Brazil are now within micro and small enterprises, according to Rankin, meaning the ability to access affordable banking products easily is an “important driver for change”.

Similarly, an impact stock capitalising on the growing digitalisation across emerging markets is Grab, which she describes as a “southeast Asian super-app”. “Its core businesses are ride-hailing and restaurant delivery, but it does a whole range of stuff, from delivering packages and groceries to e-wallets and financial services. As a result, it has managed to build up a really impressive market share.”

Grab Holdings, which is based on One-North in Singapore, operates across Malaysia, Indonesia, Myanmar, Thailand, Vietnam, the Philippines and Cambodia, as well as its home market.

Hailed by Reuters as the biggest technology company within the south-east Asian region, the company was founded in 2012 and floated on the Nasdaq in 2021, following a SPAC merger with US investment firm Altimeter.

According to Rankin, Grab currently accounts for 70% of the entire ride-hailing market, within around 5% of adults in south-east Asia using the app at least once per month. “That means 95% don’t, so there’s huge potential there in terms of growing the number of users,” she reasoned. “And because it’s so innovative in developing technology solutions, it has been a real magnet for attracting tech talent.”

Rankin added: “Grab has many different services via its app, but they’re united by that one purpose of helping to improve lives and prosperity within south-east Asia. And so, ultimately, it’s a great example of a business where profit and purpose will go hand in hand.”

Through the lens of luxury

Investors shouldn’t give up on luxury goods stocks despite lacklustre results from the sector, according to senior analyst at Killik & Co Mark Nelson, who said the firm’s managed investment service team is taking “a defensive approach” to these types of companies.

“Luxury stocks have been getting a lot of attention of late, with softness in the market being largely driven by the continued weakness of the Chinese economy,” he explained. “The current predicament raises two big questions for investors: is there a long-term structural issue in China and, if that is not the case and it is just a cyclical downturn, when will the good times start to flow again?”

One stock the team owns shares in is Franco-Italian eyewear company EssilorLuxottica, which Nelson said combines a medical device business through its lenses, with a luxury goods one through its frames.

“[It] plays to the structural trend of the growing need for eyecare due to the increasing prevalence of eye conditions among the growing population due to changing lifestyles and demographics. Management has stated that 75% of revenues are vision care-related and therefore less discretionary in nature.”

Generally speaking, the team at Killik doesn’t think the slowing luxury demand in China is structural, despite the fact many investors are drawing comparisons between China and Japan in the 1980s. “While there are similarities such as ageing populations, there are some key differences, too,” Nelson pointed out. “For a start, there remain millions of people who have not yet reached middle-class status in China, and it is this emerging middle class that has been a key driver of luxury goods demand.

“China is an ambitious nation, with grand geopolitical goals which we believe are more likely to be achieved with a prosperous population and a growing middle class. We therefore expect the Chinese government to do whatever it takes to provide the economy with the necessary support in pursuit of these goals.”

In terms of when the performance of the luxury goods sector will turn around, the analyst said this is “much trickier to predict” but that there are “early causes for optimism”.

“China does seem to be making significant attempts to re-ignite the economy via stimulus measures. Additionally, the easing of the interest rate cycle in the developed west should be supportive of increased demand for those markets,” he reasoned.

“Finally, Trump’s election in November’s US election is being seen as a positive for the sector overall, with lower taxes and a currently buoyant stockmarket,both positive for the wealth effect and, in turn, luxury demand in the US.”

Not only this, but lower valuations in the sector could make it ripe for M&A deals, according to Nelson, with Italian luxury fashion brand Moncler allegedly interested in acquiring British fashion house Burberry.

This article first appeared in the January issue of Portfolio Adviser magazine

Foresight, which offers listed and private real asset products to both institutional and retail investors, said the acquisition will “reinforce FCM’s [Foresight Capital Management’s] position as a leader in impact investing in public markets”, as well as represent the firm’s entry to the Australian market via WHEB’s joint venture with Pengana Capital Group.

All three of WHEB’s partners, alongside “key employees” such as fund managers and the investment team, will become part of Foresight and will remain based in London. They will continue to manage WHEB’s investment strategies as part of FCM, which will see its assets under management more than double following the acquisition.

George Latham, managing partner at WHEB, said: “Over the past decade WHEB has built a highly successful, award-winning franchise around a core global equity impact strategy. We have helped set the standard for impact investing in listed markets in the UK and abroad.

“As part of FCM and the wider Foresight group, we will be able to offer clients a broader suite of impact products across different asset classes with the backing of an institution with a strong balance-sheet and established distribution and risk management processes. We are very excited to have the support of Foresight in this next stage of WHEB’s development.”

Nick Scullion, partner and head of Foresight Capital Management, added the team is “delighted to be joining forces with the team at WHEB Asset Management”.

“WHEB has built an outstanding business with a strong mission and powerful brand that stands for authentic impact investing. Bringing WHEB’s products, people and culture onto the FCM platform positions our business as a leader in impact investing in public markets in the UK and in other key geographies.”

Last year, corporate bonds achieved stable returns and rocketed in popularity, following expectations of falling interest rates across most developed economies. As such, the asset class is entering 2025 at tighter spreads than markets have seen for some time, but also with more attractive yields as interest rates reached highs not seen in several years.

The performance of government bonds has been more volatile, according to industry commentators, and looks set to remain so. The election of Donald Trump as US president, combined with weaker economies across western Europe, means that while interest rate cuts are virtually inevitable, the timing and scale of them is relatively unknown.

Iain Buckle, head of UK fixed income at Aegon Asset Management, says: “We expect bond markets to remain volatile in 2025. The market currently expects a further 75 basis points of cuts from the US Federal Reserve over the next 12 months. The broader US economy still seems robust, however, and those 75 basis points of expected cuts could look optimistic if the labour market remains resilient.

“The political backdrop in the US will also drive volatility, given the market assumes a Trump presidency will lead to looser fiscal policy and higher inflation. We will learn more as he takes office, and the reality may not be what the market has implied. But it’s likely the style of his presidency will only add to the uncertainty and volatility in markets.”

David Knee, deputy CIO of fixed income at M&G Investments, agrees that Trump’s election will increase volatility across markets, as investors anticipate how his second administration pans out.

“The first Trump presidency showed what Trump said he would do and what he actually did was very different,” he reasons. “Bond markets will be watching for key policies such as tariffs, tax and immigration, which could potentially reignite inflation and limit the ability of the Fed to act, as well as add to already growing deficits.”

Over in Europe, Buckle says the outlook is “slightly more certain”. “Core European economies have been struggling for some time, negatively impacted by a weak Chinese consumer and growing competition from within China itself.

“We expect the European Central Bank (ECB) to continue to cut rates, with 125 basis points of cuts expected by the end of the year. It would take a further deterioration in the outlook for the market to price in further cuts, but that is certainly a possibility as we learn more about US tariffs early in 2025.”

To read more on the outlook for government bonds, credit, equities, emerging markets consolidation and Consumer Duty, visit the January edition of Portfolio Adviser Magazine

As soon as he took over the helm of the company which, to date, runs £238bn of assets, he embarked on a significant efficiency drive.

“Aviva had sold its French life insurance business, meaning we had to extract a very big mandate out of the company,” he tells Portfolio Adviser. “So, I set about outsourcing the middle- and back-office operations in both liquid and private markets, as well as some other non-core activities such as stock-lending.

“We’re now at a point where we’re really scalable. We have turned the business around, we know exactly what we stand for. And now, other asset managers are looking at costs and having to implement these efficiency drives. So, it feels like we are ahead of the curve.”

Versey is well-acquainted with joining firms during periods of significant change. On his first day as chief investment officer at Axa UK in 2008 – and in his first-ever CIO role – Lehman Brothers collapsed.

During his time as an M&A specialist actuarial consultant in the late ’90s, his first job in the City, he was assigned to the Scottish Widows/Lloyds deal, whereby the former demutualised and became part of the Lloyds TSB Marketing Group.

And now, after a period of transformation for Aviva Investors, he is excited to continue to grow and adapt the business.

“This year in particular, we have moved away from our efficiency work,” he says. “We have transformed our front-office and distribution teams, and we have powered up our fixed-income business through the hire of [former Federated Hermes fixed-income head] Fraser Lundie.

“We have been building our quant capabilities,” he adds. “We have brought private equity and venture capital skill into our newly-named Private Markets business, which was formerly called our Real Assets business.

“Our distribution arm in particular has been transformed and we have moved the client-facing proportion of the distribution function from 30% to 65%. [Global head of distribution] Jill Barber has really changed how we focus the business and become more client-led.

“We’ve been very busy but in a really exciting way. We are now operating on a real growth agenda.”

In terms of the fixed-income arm of the business, Versey believes the company has the bandwidth and the capability to build this out significantly.

“Because we run insurance company money, which has a lot of liability matching, we have huge scale in fixed income, but it’s not something we have really externalised to anywhere near the extent we should have done. This is the focus around bringing Fraser in,” he explains.

Read the rest of this article in the January issue of Portfolio Adviser magazine

While the firm saw net inflows into open-ended funds and segregated mandates across November and December, October marked a challenging period in terms of market performance investor sentiment.

Assets under management shrunk lightly from £10,683m at the 1 October, to £10,672m on the 31 December 2024, marking a 0.1% decrease.

UK equity products dropped from £1,910m to £1,801m, a 5.7% fall, while the firm’s international equity assets increased by 1% from £3,274m to £3,306m.

See also: Premier Miton EMs fund to use Sustainability Impact label

Premier Miton Group’s multi-asset multi-manager products suffered £56m of net outflows and a £20m slide due to market performance, meaning AUM reduced from £1,132m to £1,056m. Meanwhile, its multi-asset direct range suffered a £26m fall due to investment performance, but saw £3m of net flows from investors, meaning assets fell by 1.3% from £1,727m to £1,704m.

The group’s fixed income products saw net flows over the quarter at £27m, which were further bolstered by £13m of positive market performance. This meant AUM increased by 1.9% from £2,062m to £2,102m.

The biggest inflows, however, were seen into Premier Miton Group’s absolute return products at £114m. Including positive market contributions of £11m, this meant assets rose by 21.6% from £578m to £703m.

‘A noticeable improvement’

Mike O’Shea (pictured), chief executive officer, said he is pleased to report a “somewhat better quarter in terms of fund flows” compared to previous results.

“Uncertainty ahead of the UK budget was evident during October and this resulted in net outflows during the month. However, it was pleasing to note that flows turned slightly positive in both November and December.

“This was largely driven by positive flow into our US equity, diversified multi-asset, fixed income and absolute return strategies alongside continued outflows from our UK equity strategies. The net result for the quarter was an outflow of £33m which is a noticeable improvement on recent quarters.

“We were also pleased to see continuing demand for our absolute return strategies with an additional $50m secured for an existing mandate during the period which was invested in early January.”

The CEO added that, due to the company’s “diversified product mix” and “absolute focus on delivering strong investment performance”, the believes Premier Miton is “well-placed to benefit from an improving flow environment”.

“We have several strategies with strong investment performance that sit in key demand pools here in the UK and we are positive on the outlook for fund flows in these areas. We also continue to develop our presence in international markets with several funds registered in South Africa and new fund launches planned to meet investor demand within our Dublin UCITS.”  

While the UK’s monthly services output grew by 0.1%, compared to a 0.1% fall during the previous month, the figure remained static over three months to November 2024.

Elsewhere, construction output improved by 70 basis points, from a 0.3% fall in October to a 0.4% increase in November. It also grew by 0.2% over three months to November.

In contrast, production output fell by 0.4%, following on from a 0.6% fall in October. Over three months to November, a drop in UK manufacturing levels led to a 0.7% reduction in growth.

See also: ‘Not out of the woods yet’: UK inflation falls by 10 basis points in December

Lindsay James, investment strategist at Quilter Investors, said that while the risk of recession in the UK “remains modest for now”, we are “not out of the woods yet” with three-month GDP growth flatlining.

“This weak growth can in part be attributed to the fallout of the government’s budget, which saw consumers hit pause on spending. As we move further into this year we could see an even bigger impact,” she warned. “Businesses will soon feel the effects of increased national insurance contributions, the costs of which are likely to be passed on to employees. Wage growth is expected to take a hit, and spending could be dampened further as a result.”

James added: “It appears the Chancellor has a large task ahead, given she is banking on growth to drive the economy.”

‘The economy needs stimulus from somewhere’

Neil Birrell, chief investment officer at Premier Miton Investors and lead manager of the Premier Miton Diversified fund range, agreed that while the UK economy grew in November,  it “only just” managed to do so.

“Manufacturing and industrial output was poor, reflecting the collapse in business confidence we have seen since the Budget,” he explained. “Perhaps a combination of improving inflation and a weaker economy will spur the Bank of England on to look at cutting interest rates at their next meeting. However, inflation hasn’t gone away, but the economy needs stimulus from somewhere.”

James added that markets have generally been sceptical about the Bank of England cutting rates during the first part of this year, with less than two 25 basis-point cuts priced into markets for the full year.

See also: UK unemployment rates remains unchanged at 4.3%

“The Bank of England stood alone in its decision to hold rates in December while the ECB and Federal Reserve forged ahead with cuts. However, should the economy fail to pick up at least some momentum and the UK falls into a recession, it may be forced to change tack.”

While Scott Gardner, investment strategist at Nutmeg, concurred the UK economy grew “only by a whisker” in the latest figures, the outlook for the UK economy remains “bright”.

He said: “Falling business confidence in response to the Budget and weaker manufacturing orders dampened economic growth. This clear mood shift, represented by recent instability across financial markets, could provide a headwind to the UK’s growth ambitions and is an important area to watch in the months ahead.

“Despite this change in sentiment, the outlook for the UK is bright with the economy predicted to grow quicker in 2025 than European peers including France and Germany.

“A potential uplift in housing market activity in the lead-up to the April stamp duty changes could provide a tailwind for the economy. While we remain in ‘wait and see’ mode ahead of potential US trade tariff announcements, if they come to pass, they are expected to have a larger impact on the UK’s European neighbours.”

Outflows have reduced by £0.1bn compared to those suffered over the same time period last year, with assets under management and advice now standing at £24.6bn. This marks a fall of 5.3% over the quarter. As at 9 January 2025, assets stood at £24.7bn.

John Ions (pictured), chief executive officer at Liontrust, said some 50% of net outflows took place in October alone, “mirroring the broader UK funds industry which experienced its third worst month on record ahead of the Chancellor’s Autumn Budget”.

“Liontrust and other active managers are still facing external headwinds, but we believe the impact will lessen over the course of 2025.

“The group continues to make good progress towards our strategic objectives and there is increasingly strong fund performance.”

He added “there are reasons to believe we are entering a more positive period for active investors”, explaining: “There is currently an extreme concentration of the mega caps in the US market, which is at its highest level for a century.

“Any broadening of returns from equity markets, greater focus on valuations and lower index returns going forward will present opportunities for price discovery among active investors.”

‘Further savings have been identified’

Following the announcement of Liontrust’s business transformation programme in its half-year results during November last year, Ions said work on its operating model is “mostly complete”.

“BlackRock’s Aladdin platform was implemented in July 2024 and is working well. We now have a much more extensive relationship with BNY’s front office and middle office teams and the BNY Data Vault system is embedded in our operating model and is being used day to day with further, business as usual, development ongoing.”

Ions also referred to the proposed reduction of 25 roles across the firm – announced last year – which would be set to save Liontrust £4m in costs from employee, member and non-staff-related expenses. These changes are due to be completed by the end of March this year.

“Having reviewed the proposed cost efficiencies, further savings have been identified and we are now proposing a further small reduction in roles and non-staff related expenses across our business for annualised savings, if implemented in full, of employee-related, member-related and non-staff related expenses of around £6m,” the CEO explained.

“The additional reductions identified expect to be completed by the end of September 2025, and implementation costs for the role reductions and non-staff related expenses are now anticipated to be around £4.5m, which will be mostly incurred in the second half of the current financial year, with the balance in the first half of the next.”

10 Liontrust funds to adopt ‘Sustainable Focus’ label

Alongside the company’s results, Liontrust announced that its Sustainable Investment team’s suite of 10 UK-domiciled funds, which in total manage £8.5bn of assets, will adopt the ‘Sustainable Focus’ label under the Sustainability Disclosure Requirements and Investment labelling regime (SDR).

However, the labelling will see changes to the funds’ investment objectives and policies, all of which have received approval from the Financial Conduct Authority. Liontrust will notify investors of these specific changes by the end of this month, in order to use the SDR labels from April this year.

The funds that will be impacted are as follows:

·    Liontrust Sustainable Future Monthly Income Bond

·    Liontrust Sustainable Future Cautious Managed

·    Liontrust Sustainable Future Corporate Bond

·    Liontrust Sustainable Future Defensive Managed

·    Liontrust Sustainable Future European Growth

·    Liontrust Sustainable Future Global Growth

·    Liontrust Sustainable Future Managed

·    Liontrust Sustainable Future Managed Growth

·    Liontrust Sustainable Future UK Growth

·    Liontrust UK Ethical

Commenting on the SDR labelling and subsequent mandate changes, Ions said: “Liontrust will be adopting the FCA’s Sustainability Focus label for all 10 of the UK-domiciled funds managed by the Sustainable Investment team with a total of £8.5bn in AuMA.

“Improving trust and transparency of sustainable investment funds will play a key role in clients’ decision making. Clients will benefit from Liontrust having one of the broadest fund ranges with SDR labels, comprising equity, fixed income and managed funds.

“Liontrust and other active managers are still facing external headwinds, but we believe the impact will lessen over the course of 2025. The group continues to make good progress towards our strategic objectives and there is increasingly strong fund performance.”